Articles

Managing Gray Swan Events

By Staff Writers

Published: 2/13/2018

Globalization has made us much more aware of the existence of “gray swan” events—those which have the potential to escalate into something with truly disruptive consequences. While improvements in technology allow today’s treasurers to exercise greater control, they also have the potential to transmit the effects of a disruptive event much more quickly. Even if disruptive gray swan events may be predictable in their occurrence, the impact and consequences are more difficult to forecast, both for individual organizations and the economy as a whole.

AFP’s latest Executive Guide, underwritten by OpenLink, is intended to help strategic treasury practitioners identify ways in which they can be more proactive in identifying and monitoring exposures at an enterprise-wide level. A proactive approach will help practitioners identify those events with more significant consequences and take action to mitigate their effects.

The guide is structured in three main parts. The first part focuses on the treasurer’s core role, that of tactical short-term financial risk management. The second part evaluates the more proactive role today’s treasurers are being asked to play, assessing how they can take a more strategic approach to the management of risk. The third part identifies ways in which treasurers can create a structure through which potentially disruptive risks can be identified and monitored so that additional action can be taken when necessary.